What is MGT-14? This is the first question in our mind. The Ministry of Corporate Affairs (MCA) regulates all the administrative work of the corporate sector of the country. There are various rules and regulations for all the companies, whether private or government, and the firm follows those rules in every context. The form was one of the measures to allow the companies' better functioning. Many malpractices and issues are regularly highlighted in the industries among the owners or shareholders regarding implementing many changes or resolutions. To avoid these things, MCA form MGT-14 comes in use.
To run a company or a business, many necessary changes must be made at a time. These changes are decided in the meetings of the shareholders. The registrar is required to use the form and fill it out.
Did you know?
MGT-14 must be furnished through the firm within the Registrar of Companies under sections 94(1) and 117(1) under the Companies Act 2013.
What is MGT-14 Form?
MGT-14 is a form that came into existence after introducing the amendments in the Companies Act of 2013. The form is the way to make resolutions in the companies. The new changes must be filled in the form by the registrar, which is made in meetings of the board members. However, we need to take the approval of all the company board members to fill a resolution. The resolution must be filled as its type. Moreover, private companies are not required to go as the rules of the government companies.
Purpose of MGT-14 Form
The registrar of the companies fills the MGT-14 as per the rules mentioned in sections 117(1) and 94(1) of the new Companies Act 2013. The purpose is to mark the resolution or agreement made in meetings of the board of directors, shareholders or creditors by a liquidator or Registrar of Companies (RoC) in form MGT-14. The objective introduced was to fill certain major resolutions with the company registrar. It is an e-form. Moreover, there are various categories for filling the resolutions. The different categories are board resolutions, special resolutions, and ordinary resolutions. The registrar only fills the MGT-14 form after approval from all board members. However, there are many paper works and documents required to fill it. Companies are also charged with form fees. Moreover, they fail to file resolutions, or the registrar does not do it through the proper legal process. The government had provisions for the penalty on the companies.
The country is constantly expanding its corporate sector. Be it private or government companies, and all are trying to boost their business. We can see the increasing involvement of people in the share market, together with investments. Moreover, people are coming together and doing startups at a large level to tackle the problems. These things are happening, so the government needs to regulate all the activities.
Also Read: Section 186 of the Companies Act, 2013
Presently running a company is not an easy task. They have to look upon all the guidelines issued by the government. Frequent changes are done in the companies for better performance. They often have resolutions decided by the board members, shareholders, and creditors. Those resolutions are required to be filled in the MGT-14 form. The resolutions or agreements are filled in the form via the registrar of the company. However, the agreements are only filled after the approval of all the board members. Moreover, the companies will have to fill in the details of the meetings within 30 days after the resolution is made with the form fees.
MGT-14 for Private Limited Companies
Private limited companies also make resolutions through the MGT-14 form. The answer to this question is no. However, there are things that we must know about it. The resolutions made by the private companies under section 179(3) of the new Companies Act, 2013. Which says that when board powers are used in the meetings, it is not required to fill the MCA form MGT-14. So, private companies are not required to fill out the form at any point mentioned in the rules of the new companies act.
The new companies act 2013 addressed the issues of private limited companies. Some reliefs are given to the companies regarding transactions among private related parties, capital class, and voting rights. The new Companies Act 2013 also erased some procedures for accepting deposits from members to simplify things. Further made some general meetings compliances for private limited companies. The relaxation was also given regarding related-party transactions among private holding subsidiaries.
List of Resolutions Under MGT-14 Form
The MCA form MGT-14 has 3 types of resolutions: board resolutions, special resolutions, and written resolutions. All the resolutions must be filled according to the categories under which it comes. The registrar of the company needs to file resolutions within 30 days of passing the resolution or agreement being made. Otherwise, the institution will face a penalty.
At least 75% of the board directors have to approve to pass the board resolutions. The shareholders' signatures are also required on the agreement made. All the details of the board resolutions must be filled in Annexure A of MGT-14. The area which comes under board resolutions are as follows:
- The account data of the company and other records.
- Suppose the company wants to make any political contribution, granting a loan, making a guarantee, or providing security. Moreover, the company will fill the resolutions of making any investment.
- To make any transaction contracts with related parties.
- Appointing personnel for a full-time managerial post. While appointing a new managing director at the same post in another firm.The variation in terms of the appointment of a managing director.
- To buy back securities and to issue securities in any foreign countries.
- To ask for a loan and verification of the firm's financial statements.
- Moreover, this section also covers the issues related to expanding the business, mergers, separation, and acquiring a new firm.
As the name suggests, some special changes or decisions come under this form. For this also, we mandatorily require 75% board directors' approval. The issues which come under special resolutions are as follows:
- To establish any new articles and change the written articles of associations.
- Want to change the official address of the company in the same state.
- Releasing stocks, securities, and changes in shareholders' authorities.
- Reduction in the share capital and buying of paid shares for benefits of employees.
- To appoint more than 15 directors and remove the auditor before completion of the term. Moreover, in the case of posting a new independent director with restrictions on the number of appointments. We need to fill these resolutions in the special resolution categories of MGT-14.
- Selling and leasing of the company's undertaking only when the company owns a whole undertaking.
- To allow the payments of loans for later periods and a program for directors to get loans.
- In the appointment of directors above 70 years and the matters of the company which should be investigated.
- Closing the company by a tribunal or voluntarily, and merging a closing company with other companies.
- Providing sanction to the company liquidator to exercise certain powers accepting shares.
- To collaborate between the company which is about to close and its creditors. Also, to allow all the papers of the company and records when it is too close.
In this category of MGT-14 form resolution, there must be at least 50% directors' approval on the decision. Moreover, a majority of shareholders' approval is also required. The issues which come under this are as follows:
- In case the registrar directs to change the name of the company if it is given after providing wrong details, also if the union government directs because of having another company name the same or having the same registered trademark.
- If firms want credit deposits from the public.
- Representation of corporations at the meeting of companies or at any meetings of creditors.
- To appoint a person other than a retiring auditor as a statutory auditor and remove the director before the expiry of the period of his office. Moreover, to appoint a managing director.
- Commission of the powers by the board as mentioned under the new companies act.
- To allow directors to make non-cash transactions.
- Intentionally ending of the company because of the lasting of the firm duration or any such activities which results to close the firm.
While concluding the article, we got the answer to what MGT-14 is. The MCA form MGT-14 is the form that is needed to be filled regarding making any resolutions in the company. However, private companies are not under these restrictions. The registrar fills the form of the company within a month after approval of changes. There are 3 resolutions in the form named to board, special, ordinary. The agreements should be filled in the specified resolutions. Each type of category has the specified issues which come under it.
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